Sydney-based employer slammed for ‘deliberate and systematic’ underpayment of staff

The Federal Court has applied vulnerable worker legislation for an employer’s underpayment of nearly 400 employees.

The $550,000 penalty was levelled against a Sydney-based warehousing and distribution company for underpaying its migrant workers.

A further $8,190 penalty was imposed against the company’s sole director and general manager at the time of the wrongdoings, Song Cheng.

In his judgment, Justice John Snaden said: “It is apparent that, despite being aware of the award and the obligations that it imposed, Mr Cheng instead determined that Winit should not meet them.”

Winit (AU) Trade was investigated by the Fair Work Ombudsman (FWO) after the investigative body received several requests for assistance from Winit employees.

Though the FWO found that Winit had underpaid nearly 400 employees between 2014 and 2019, the court case focused on a sample of 30 such employees.

All 30 were migrant employees – mostly from Taiwan and aged in their 20s – who were underpaid a total of $368,684 between July 2017 and June 2018. All 30 of the sample employees held working holiday visas.

The 30 employees regularly worked up to 60–70 hours per week but received no penalty or overtime entitlements in contravention of their entitlements under the Services and Wholesale Award 2010.

‘Serious’ contraventions

In 2017, following Fairfax Media’s exposure of systematic exploitation of vulnerable workers across several major employers, the Protecting Vulnerable Workers Act was passed.

Among other things, it added a new class of “serious contraventions”, which can attract a maximum penalty up to 10 times as high as the pre-existing maximum penalty for offences under the act.

In this case, the court found that Winit’s underpayment had, in three cases, satisfied the definition of “serious contraventions” because of the deliberate and systematic nature of the underpayments.

The company also reduced at least two employees’ shifts after they refused to accept Winit’s settlement offer of 25 per cent of outstanding entitlements, provided shortly after the FWO commenced its investigation.

“When alerted to its wrongdoing, Winit’s initial response was not to correct it or take steps to ensure that it wouldn’t be repeated: it was to negotiate a monetary compromise,” said Justice Snaden.

“When two of [Winit’s] employees pushed back on that course, it took reprisal action against them in the form of reduced working hours.”

Fair Work Ombudsman Anna Booth said the judgment demonstrated that “employers who exploit migrant workers in Australia will face serious consequences”.

“Lawful minimum rates apply to all employees in Australia, and they are not negotiable. All workers in Australia have the same rights, regardless of nationality and visa status,” said Ms Booth.

All 30 of the sample employees and a large majority of the remaining employees have now been repaid.

Migrant worker exploitation

Migrants and visa holders are particularly vulnerable to shoddy workplace practices. Though the FWO has an agreement with the Department of Home Affairs to protect the visas of those reporting exploitation, many still choose silence over taking the risk.

“I’m not going to risk my visa to chase my wages if there is only a chance or a hope that the government will protect me,” an international student told the Employment Rights Legal Service.

Recent migrants are twice as likely as long-term residents to be underpaid, and one in six migrants is paid below the national minimum wage in Australia, according to the Grattan Institute’s Short-changed: How to stop the exploitation of migrant workers in Australia report.

The report found that three sets of reforms are needed to eliminate the exploitation.

1. Visa rules that increase migrants’ risk of exploitation should be reformed.
2. Workplace migration laws should be strengthened and better enforced.
3. Migrants should be given more help to reclaim lost wages.

“Exploitation hurts migrants, but it also weakens the bargaining power of Australian workers, harms businesses that do the right thing, damages our global reputation, and undermines confidence in the migration program,” said report lead author and Grattan Institute economic policy program director Brendan Coates.

Responsible employment

HR Assured suggests businesses can ensure their workers’ rights are being protected in the following five ways:

1. Provide at least the minimum employment standards.
2. Stay informed.
3. Check pay and leave entitlements are correct.
4. Keep records.
5. Conduct regular HR audits.

“Private sector employers must respect the rights of migrants, act collectively, and engage in key activities designed to identify solutions,” said a coalition of United Nations experts.

To learn about the workplace rights of visa holders and migrant workers, read the FWO factsheet here.